2015-12-17 16:00:01 fib1618: good day2015-12-17 16:00:03 fib1618: how is everyone?2015-12-17 16:00:15 rite01: good2015-12-17 16:02:09 fib1618: thanks again for the scripts2015-12-17 16:02:48 rite01: no problem2015-12-17 16:04:43 fib1618: OK...any questions or comments before we get started??2015-12-17 16:05:15 rite01: Noticed the components when they touch buy or sell obligatory signals works best you take the MCSUM direction into account?2015-12-17 16:05:22 fib1618: ouch...just saw what happened today2015-12-17 16:05:39 rite01: I know what was that?2015-12-17 16:05:56 fib1618: it's called moving lower after snapping back to the MCO zero line2015-12-17 16:06:16 rite01: OK then2015-12-17 16:06:18 fib1618: yes...the MCSUM is your intermediate term trend oscillator2015-12-17 16:06:27 fib1618: so it takes the greater weight2015-12-17 16:06:38 fib1618: for example2015-12-17 16:06:46 fib1618: if money is moving in2015-12-17 16:06:53 fib1618: and the RSI is "oversold"2015-12-17 16:07:03 fib1618: this is your buy point2015-12-17 16:07:14 fib1618: so if the MCSUM is below the zero line2015-12-17 16:07:25 fib1618: and the MCO, or its components, are above their zero line2015-12-17 16:07:31 fib1618: the only thing prices can do is...2015-12-17 16:07:34 fib1618: chop2015-12-17 16:07:39 fib1618: no trend2015-12-17 16:07:44 rite01: does being lower (MCSUM) or higher have bearing on the components obligatory bounce?2015-12-17 16:07:58 fib1618: technically, no2015-12-17 16:08:22 fib1618: which then provides greater insight when they don't do what they're supposed to2015-12-17 16:08:35 fib1618: all of this is rhythm2015-12-17 16:09:08 fib1618: we're measuring the "brea(d)th" and "heart beat" of the market2015-12-17 16:09:14 fib1618: you're Dr. Mike2015-12-17 16:09:26 fib1618: and you're looking at the market's EKG2015-12-17 16:09:49 fib1618: sometimes there are palpitations2015-12-17 16:10:16 fib1618: that's something that can be looked at as being part of the usual wear and tear2015-12-17 16:10:24 fib1618: but too much out of sync, and you have problems2015-12-17 16:10:31 rite01: but when the MCSUM is below zero and moving up .. should mean components heading up as well although zig zaging2015-12-17 16:10:59 fib1618: try it this way2015-12-17 16:11:12 fib1618: the 10% component is the 19 day EMA2015-12-17 16:11:21 fib1618: the 5% component is the 39 day EMA2015-12-17 16:11:37 fib1618: both of the cumulative A/D or U/D line being measured2015-12-17 16:11:50 fib1618: if one or the other component is above the zero line2015-12-17 16:11:57 fib1618: it tells you that specific EMA is moving higher2015-12-17 16:12:03 fib1618: if they are below their zero line2015-12-17 16:12:08 fib1618: the EMA is moving lower2015-12-17 16:12:24 fib1618: the MCSUM tells you the distance BETWEEN these two EMA's2015-12-17 16:12:30 fib1618: so...2015-12-17 16:12:37 fib1618: if the 10% is above its zero line2015-12-17 16:12:49 fib1618: showing that it's rising2015-12-17 16:12:57 fib1618: but the 5% is below its zero line2015-12-17 16:13:04 fib1618: showing that it's declining2015-12-17 16:13:31 fib1618: you then use the MCSUM to measure the distance between the two EMA's before they cross2015-12-17 16:13:41 fib1618: they "cross" at the MCSUM zero line2015-12-17 16:13:58 fib1618: this is why the zero line is so important2015-12-17 16:14:12 fib1618: for it tells us which direction money is flowing2015-12-17 16:14:19 fib1618: both in direction and on a trending basis2015-12-17 16:14:38 fib1618: so until all shows us on one side of the zero line at the same time2015-12-17 16:14:45 fib1618: prices can NOT trend2015-12-17 16:14:48 fib1618: they will only chop2015-12-17 16:15:04 fib1618: sort of like having one of your spark plugs our of sync2015-12-17 16:15:20 fib1618: you may move forward...but not without a lot of effort and lurching2015-12-17 16:15:39 rite01: thanks for the reminders... I'm just trying to2015-12-17 16:16:01 rite01: use this for a one day trade..2015-12-17 16:16:08 fib1618: hard to do2015-12-17 16:16:10 fib1618: because2015-12-17 16:16:17 fib1618: all of this data is on a daily basis2015-12-17 16:16:30 fib1618: so in order to take full advantage of it for one day2015-12-17 16:16:38 fib1618: you have to have everything moving in one direction2015-12-17 16:16:45 rite01: right, I see that2015-12-17 16:16:50 fib1618: otherwise...you get yesterday and today2015-12-17 16:16:59 fib1618: Tuesday was a reflex2015-12-17 16:17:10 fib1618: Wednesday was relief2015-12-17 16:17:17 fib1618: Thursday was realization2015-12-17 16:17:29 fib1618: we're still not out of the hole here2015-12-17 16:17:36 fib1618: no buy signal has been given on a daily basis2015-12-17 16:17:42 fib1618: intraday...OK2015-12-17 16:17:57 fib1618: but even that was to be short lived as most bear market rallies are2015-12-17 16:18:09 fib1618: context is everything2015-12-17 16:18:29 fib1618: here's what I have found over the years2015-12-17 16:18:56 fib1618: there is NOTHING out there that supersedes the directional flow of breadth2015-12-17 16:19:16 fib1618: for money must move in advance of the eventual direction of prices2015-12-17 16:19:22 fib1618: breadth (money) leads (the direction of) price2015-12-17 16:19:55 fib1618: so when we get signals and hammer sticks like we did on Tuesday off of deeply non divergent levels2015-12-17 16:20:07 fib1618: these are typical movements in bear markets2015-12-17 16:20:36 fib1618: and eventually we take out these same low points2015-12-17 16:20:48 fib1618: this is why MCO texture is important2015-12-17 16:21:06 fib1618: sort of like building a multi story building2015-12-17 16:21:12 fib1618: you must have a solid foundation2015-12-17 16:21:21 fib1618: and then as you begin to build on that foundation2015-12-17 16:21:47 fib1618: you go one story...look around to make sure that it's stable...and then you move on to the next story2015-12-17 16:21:59 fib1618: all the while making sure that you have UNDERLYING SUPPORT2015-12-17 16:22:03 rite01: when you say non divergent you mean in the price and MCO right2015-12-17 16:22:10 fib1618: always2015-12-17 16:22:30 fib1618: as the MCO is a momentum tool that measures the short term TREND of money flow2015-12-17 16:22:40 fib1618: so...if prices move to a lower low2015-12-17 16:22:51 fib1618: without increased selling to get you there2015-12-17 16:22:58 fib1618: you create divergence2015-12-17 16:23:09 fib1618: money leads the direction of price2015-12-17 16:23:11 fib1618: period2015-12-17 16:23:15 fib1618: case closed2015-12-17 16:23:20 rite01: Thanks great information...2015-12-17 16:23:36 fib1618: there will be, at times, anomalies to this concept in market dynamics2015-12-17 16:23:51 fib1618: but they are almost always corrected...2015-12-17 16:23:55 fib1618: we "reset"2015-12-17 16:24:09 fib1618: for without the fuel needed to meet a goal2015-12-17 16:24:15 fib1618: you're just not going to get there2015-12-17 16:24:17 fib1618: this is why2015-12-17 16:24:32 fib1618: when we hear anyone that the market is going to Dow 10,0002015-12-17 16:24:40 fib1618: unless we have money flow leading the way2015-12-17 16:24:49 fib1618: that analyst is going to be dead wrong2015-12-17 16:25:05 fib1618: the market doesn't move based on voodoo or bias2015-12-17 16:25:11 fib1618: it moves on the directional flow of money2015-12-17 16:25:21 fib1618: simple, simple, simple2015-12-17 16:25:36 fib1618: supply and demand2015-12-17 16:25:49 fib1618: right now2015-12-17 16:26:01 fib1618: we have money sloshing around indecisively2015-12-17 16:26:16 fib1618: my best example here2015-12-17 16:26:19 fib1618: as a kid2015-12-17 16:26:36 fib1618: and you would take your forearm and moving the water back and forth in a full bathtub2015-12-17 16:26:48 fib1618: and the more arm energy you put behind it2015-12-17 16:26:58 fib1618: the higher up against the wall it would go2015-12-17 16:27:03 fib1618: take away your arm2015-12-17 16:27:08 fib1618: and the water doesn't just stop 2015-12-17 16:27:28 fib1618: it moves back and forth until the momentum that was introduced by your arm motion has subsided2015-12-17 16:27:40 fib1618: same thing here with the market2015-12-17 16:27:52 fib1618: also keep in mind2015-12-17 16:28:00 fib1618: that the higher prices go2015-12-17 16:28:11 fib1618: the bigger the typical 1% move2015-12-17 16:28:23 fib1618: so it looks and feels different2015-12-17 16:28:32 fib1618: but percentage wise..there is order2015-12-17 16:28:57 fib1618: that's why institutions love playing high cost stocks2015-12-17 16:29:14 fib1618: if you get a 1% move in a $10 stock...that's only .102015-12-17 16:29:47 fib1618: $100 stock...$12015-12-17 16:30:09 fib1618: $500 stock...a $5 move2015-12-17 16:30:19 fib1618: it's all relative2015-12-17 16:30:31 fib1618: OK..so as not to bore you to sleep2015-12-17 16:30:38 fib1618: let's move on to today's data2015-12-17 16:30:45 rite01: not bored at all2015-12-17 16:30:52 rite01: thanks again2015-12-17 16:31:22 fib1618: after snapping toward the zero line with a -3 reading on Wednesday2015-12-17 16:31:37 fib1618: the NYSE CO breadth MCO moved sharply lower today2015-12-17 16:31:54 fib1618: coming in with a -32 reading2015-12-17 16:32:38 fib1618: this negative action has now generated a continuation to the downside in the trend of the NYSE CO breadth MCSUM2015-12-17 16:32:59 fib1618: which moved down and through the -300 level2015-12-17 16:33:01 fib1618: because of this2015-12-17 16:33:13 fib1618: the next area of potential support will come in at the -500 level2015-12-17 16:33:31 fib1618: so now that the market has accomplished making all of the near term puts worthless2015-12-17 16:33:49 fib1618: we can now resume the negative trend prior to this week's "oversold" bounce2015-12-17 16:34:17 fib1618: note also that the CO 10% components found snapback resistance with the 5% component today2015-12-17 16:34:30 fib1618: so a reversal in this short term trend was to be expected2015-12-17 16:35:05 fib1618: and I'm getting that "low down" feeling again looking at the NYA price chart2015-12-17 16:35:40 rite01: and the MCSUM below zero and heading down at the snapback2015-12-17 16:35:40 fib1618: notice that we weren't able to move back above the reversal price bar of last Wednesday2015-12-17 16:35:57 fib1618: yes Mike...it was just a hesitation point2015-12-17 16:36:25 fib1618: remember that since the MCSUM measures the distance between the 19 and 39 day EMA's of the cumulative line2015-12-17 16:36:51 fib1618: that the further the distance between the individual postings also tells us how fast or slow money is moving2015-12-17 16:37:03 fib1618: the wider the spacing...the larger the sums of money moving in or out2015-12-17 16:37:16 fib1618: the narrower the spacing...the smaller the sums of money2015-12-17 16:37:30 rite01: thanks for reminders2015-12-17 16:38:31 fib1618: the beauty of the McClellan's is that they give us so much information at a single glance2015-12-17 16:38:41 fib1618: more than 99% of traders out there don't see it2015-12-17 16:38:57 fib1618: especially with the significant inclusion of the components as we do in here2015-12-17 16:39:10 fib1618: so much so2015-12-17 16:39:42 fib1618: that you can trend trade the market with very little effort because you know what the general market conditions are2015-12-17 16:40:15 fib1618: this is why the BETS works as well as it does2015-12-17 16:40:48 fib1618: where many continued to look for higher stock prices into the 4th quarter2015-12-17 16:40:57 fib1618: the BETS remained solidly negative2015-12-17 16:41:14 fib1618: so the most that could happen was a challenge of the highs2015-12-17 16:41:28 fib1618: but nothing that would mimic a trend2015-12-17 16:41:37 fib1618: OK..back to the data2015-12-17 16:41:55 fib1618: moving to the NYSE Composite breadth MCO2015-12-17 16:42:13 fib1618: and we also saw it continue to snapback to or toward the zero line on Wednesday2015-12-17 16:42:28 fib1618: but only to pull back slightly today2015-12-17 16:42:52 fib1618: this would indicate that the interest rate sensitive issues were finding general support on this technical pullback2015-12-17 16:43:13 fib1618: which would mean that the weight of this same pullback came with the common stock issues2015-12-17 16:43:30 fib1618: small "whispers" like this are important2015-12-17 16:44:01 fib1618: because interest rate sensitive issues tell us how liquidity is doing at any given time2015-12-17 16:44:39 fib1618: liquidity (in this case) is the amount of money that is available for investment2015-12-17 16:46:02 fib1618: looking at the components2015-12-17 16:46:24 fib1618: and we see that the 10% Trend found resistance at the 5% Trend on Wednesday2015-12-17 16:47:11 fib1618: so some sort of pullback was to be expected today2015-12-17 16:47:40 fib1618: notice now how the NYSE Composite breadth MCSUM continues to decline in spite of Tuesday and Wednesday's reflex rally2015-12-17 16:48:01 fib1618: which again tells us that those advances are that of the bear market type...against the flow of a declining trend in money flow2015-12-17 16:48:17 fib1618: and the vacuum when created is usually filled very quickly2015-12-17 16:48:30 fib1618: in fact2015-12-17 16:48:37 fib1618: Wednesday rally never happened2015-12-17 16:48:46 fib1618: as we're back to where we were on Tuesday2015-12-17 16:48:58 fib1618: that's the vacuum being filled2015-12-17 16:49:19 fib1618: moving to the NASDAQ breadth MCO2015-12-17 16:49:22 rite01: I see that2015-12-17 16:49:33 fib1618: and here we also saw a nice snapback toward the zero line here as well2015-12-17 16:49:38 fib1618: which reminds me2015-12-17 16:49:47 fib1618: when ever we look for technical snapbacks2015-12-17 16:50:12 fib1618: the term in which I use is that its a process of "to or towards"2015-12-17 16:50:33 fib1618: many other analysts use, and trade off of, the word "to"2015-12-17 16:50:53 fib1618: which can be problematic if you're only moving "toward" something2015-12-17 16:50:58 fib1618: take the MCO's today2015-12-17 16:51:13 fib1618: the NYSE CO....we'll call its progress "to" the zero line2015-12-17 16:51:23 fib1618: but the NYSE Composite..was "toward"2015-12-17 16:51:31 fib1618: nothing is exact in this business2015-12-17 16:51:53 fib1618: so, as technicians, we look for the reasonable expectation instead of perfection2015-12-17 16:52:06 fib1618: and lock and load based on that2015-12-17 16:52:10 fib1618: take Tuesday2015-12-17 16:52:22 fib1618: we had several MCO's above their blip resistance points2015-12-17 16:52:26 fib1618: but other were not (like the NYSE Composite)2015-12-17 16:52:34 fib1618: strictly speaking2015-12-17 16:52:46 fib1618: until you get uniformed confirmation2015-12-17 16:53:23 fib1618: it's dangerous to trade on the expectation that all will move above thier blip resistance point2015-12-17 16:53:30 fib1618: but once they did (intraday)2015-12-17 16:53:48 fib1618: and held steady (remember the market was choppy sideways into the FED announcement)2015-12-17 16:53:59 fib1618: it was at that time where one side took control2015-12-17 16:54:29 fib1618: and we fulfilled the technical expectation of a snapback to or towards the zero line (neutral) after being deeply "oversold"2015-12-17 16:54:35 fib1618: once that's out of the way2015-12-17 16:54:41 fib1618: one side can then take control again2015-12-17 16:54:50 fib1618: and as mentioned on Tuesday2015-12-17 16:54:58 fib1618: the odds are with the sellers2015-12-17 16:55:00 fib1618: because..2015-12-17 16:55:21 fib1618: the directional flow of money, on an intermediate term trending basis, is to the downside as measured by the MCSUM2015-12-17 16:55:48 fib1618: so these kind of zero line snapbacks are position trades2015-12-17 16:55:59 fib1618: where your risk is rather minimal2015-12-17 16:56:09 fib1618: but you reward is quite substantial2015-12-17 16:56:36 fib1618: and can be measured by how far away from neutral (the zero line) you are when using the MCO and MCSUM2015-12-17 16:56:51 fib1618: you then...2015-12-17 16:56:52 fib1618: in a way2015-12-17 16:56:57 fib1618: become the "house"2015-12-17 16:57:04 fib1618: and not the "chump"2015-12-17 16:57:31 fib1618: probability and outcome...that's all we do (and measure) as traders2015-12-17 16:58:08 fib1618: note that the NASDAQ breadth MCSUM broke away to the downside today from the -250 level2015-12-17 16:58:31 fib1618: so our expectation into next week is for continued weakness as we move toward the -500 level2015-12-17 16:58:40 fib1618: and the deeper we go in the MCSUM2015-12-17 16:58:48 fib1618: the more downside pressure that's applied to prices2015-12-17 16:59:01 fib1618: equal and opposite on the north side of zero2015-12-17 16:59:30 fib1618: the NDX breadth MCO actually moved above the zero line on Wednesday2015-12-17 16:59:40 fib1618: but was not able to take out the previous highs seen on the chart2015-12-17 17:00:00 fib1618: so unless the buyers came in to further support the pattern2015-12-17 17:00:21 fib1618: a snapback back down to or toward the zero line would be expected2015-12-17 17:00:28 fib1618: and viola...that's what we got today2015-12-17 17:00:38 fib1618: not only that2015-12-17 17:00:54 fib1618: but the zero line was broken as we finished with a -222015-12-17 17:01:10 fib1618: so since we're close to natural support at -252015-12-17 17:01:25 fib1618: the odds here suggest a snapback back up to the zero line near term2015-12-17 17:01:31 fib1618: and if that doesn't happen2015-12-17 17:01:51 fib1618: then we know that the selling pressure is heavier than what's being indicated2015-12-17 17:02:06 fib1618: and because of our current position to the Monday price lows2015-12-17 17:02:40 fib1618: a challenge of these lows would become probable on any break below -252015-12-17 17:02:58 fib1618: which...as things must work together2015-12-17 17:03:10 fib1618: would also provide a lower low in the NDX breadth MCSUM2015-12-17 17:03:39 fib1618: instructing us of a continuation of money moving out of this basket of issues2015-12-17 17:03:49 fib1618: and if money is moving out2015-12-17 17:04:07 fib1618: the odds of prices moving higher become less and less probable2015-12-17 17:04:20 fib1618: and you position your trade accordingly2015-12-17 17:04:26 fib1618: regardless of hammers2015-12-17 17:04:45 fib1618: regardless of previous "oversold" patterns2015-12-17 17:05:14 fib1618: as they only mean something IF money begins to lead prices out of these same potential turning points2015-12-17 17:05:33 fib1618: what we occasionally refer to as the "character" of a move2015-12-17 17:05:54 fib1618: the best thing about all this is2015-12-17 17:06:24 fib1618: if the MCO and the Components are in disagreement as to their positions with respect to their zero lines2015-12-17 17:06:36 fib1618: we KNOW that we have time to be patient2015-12-17 17:06:43 fib1618: that's on a short term basis (that of 4-6 weeks)2015-12-17 17:06:53 fib1618: and if the MCO and MCSUM are in disagreement2015-12-17 17:07:28 fib1618: we then know that we won't see trending price moves either on an intermediate term basis (that of 6-12 weeks)2015-12-17 17:07:47 fib1618: and knowing all this2015-12-17 17:07:59 fib1618: allows you to trade both as a scalper and day trader as well2015-12-17 17:08:18 fib1618: for if everything is in agreement2015-12-17 17:08:52 fib1618: the path of least resistance, and therefore the easier profitable trade, is going along this same path2015-12-17 17:09:02 fib1618: but if there's any disagreement2015-12-17 17:09:07 fib1618: you "hit and run"2015-12-17 17:09:30 fib1618: as the market will be choppy, if not volatile, until the engine is "tuned"2015-12-17 17:11:45 fib1618: moving on2015-12-17 17:12:06 fib1618: hard reversal bar to the downside on the SPX today2015-12-17 17:12:15 fib1618: and right at the zero line of the SPX breadth MCO2015-12-17 17:12:41 fib1618: this then suggests that all of the willing and unwilling buyers/covered shorts were spent2015-12-17 17:12:54 fib1618: and that the sellers have taken back control of the action2015-12-17 17:13:41 fib1618: we also see that the SPX components also couldn't find any follow through positive money flow today2015-12-17 17:13:56 fib1618: while the SPX breadth MCSUM failed to even snapback up to its zero line2015-12-17 17:14:22 fib1618: suggesting that the sellers are now taking an upper hand for the intermediate term2015-12-17 17:14:52 fib1618: looks like a test of 2020 is the near term objective here2015-12-17 17:15:33 fib1618: with any close below 2010 likely to push prices below the November lows in a decisive way2015-12-17 17:16:43 fib1618: doing a little math here...one sec2015-12-17 17:17:55 fib1618: looks like we peaked out at just above a .618 retracement level of the December decline yesterday2015-12-17 17:17:59 fib1618: could be corrective2015-12-17 17:18:10 fib1618: but if it's not...shrug2015-12-17 17:18:39 fib1618: now the OEX breadth MCO had a better go of it on Wednesday2015-12-17 17:18:56 fib1618: as it closed above both its zero line and its horizontal resistance point2015-12-17 17:19:04 fib1618: problem is...2015-12-17 17:19:12 fib1618: we didn't get follow through on this today2015-12-17 17:19:27 fib1618: so a reset was the result2015-12-17 17:19:40 fib1618: now that December futures have expired2015-12-17 17:19:56 fib1618: it will be important that the buyers show some support into tomorrow's close2015-12-17 17:20:14 fib1618: or next week has the potential of being very weak2015-12-17 17:20:17 fib1618: speaking of which2015-12-17 17:20:38 fib1618: remember that our chats next week with be on Monday and Tuesday because of the holiday on Friday2015-12-17 17:21:18 fib1618: I would expect Wednesday to be the last "full day" before shut down as traders begin to take off2015-12-17 17:21:23 fib1618: and as we know2015-12-17 17:21:39 fib1618: thinly traded days do have a tendency to see large moves2015-12-17 17:21:50 fib1618: we'll see how things look on Monday2015-12-17 17:21:52 fib1618: anyway2015-12-17 17:21:56 fib1618: back to the charts at hand2015-12-17 17:22:19 fib1618: notice that the OEX breadth MCSUM is far weaker than the SPX breadth MCSUM2015-12-17 17:22:41 fib1618: and since something like 80% of the weighting in the SPX is with the top 100 stocks2015-12-17 17:23:02 fib1618: it would be reasonable to expect that the SPX is going have a tough time finding near term support2015-12-17 17:23:28 fib1618: notice also how the OEX 10% and 5% Trend found resistance right at their zero lines2015-12-17 17:23:55 fib1618: still fascinates me when things like that happen as regularly as they do2015-12-17 17:24:01 fib1618: "how does the market know?"2015-12-17 17:24:34 fib1618: the Dow breadth MCO also failed to hold above its zero line2015-12-17 17:24:54 fib1618: and now the Dow breadth MCSUM is up againstzero line resistance2015-12-17 17:25:05 fib1618: as opposed to it being holding zero line support2015-12-17 17:25:33 fib1618: quite a difference in the potential outcome this conveys2015-12-17 17:25:52 fib1618: bad day for the MID2015-12-17 17:26:01 fib1618: as it not only reversed hard to the downside today2015-12-17 17:26:14 fib1618: but it also took out Tuesday's reversal close in prices2015-12-17 17:26:23 fib1618: this would then suggest that lower price lows are likely2015-12-17 17:26:53 fib1618: and this will probably time well with the MID breadth MCSUM moving down and through its zero line2015-12-17 17:27:12 fib1618: which, minimally, is two days away2015-12-17 17:27:19 fib1618: unless we have a near term collapse tomorrow2015-12-17 17:27:59 fib1618: with the SML breadth MCSUM at the zero line now with a -22015-12-17 17:28:15 fib1618: what happens here will be our near term proxy for the direction of the MID2015-12-17 17:28:37 fib1618: the reason for this is that in order for prices to trend higher2015-12-17 17:29:04 fib1618: you must have more than ample liquidity in order for money to seek out those issues that are looked upon as being "less deserving"2015-12-17 17:29:23 fib1618: as they don't provide consistent earnings and/or dividends2015-12-17 17:29:35 fib1618: so if the secondary market is leading lower2015-12-17 17:29:54 fib1618: those issues that would be classified as "growth" products2015-12-17 17:30:12 fib1618: they fully depend on the cost and availability of money for their existence2015-12-17 17:30:22 fib1618: and if liquidity is contracting2015-12-17 17:30:33 fib1618: so are the future prospects of anything that is called "growth"2015-12-17 17:30:50 fib1618: only stocks that provide "value" are supported by what's left to use for investment2015-12-17 17:30:56 fib1618: "total return"2015-12-17 17:31:03 fib1618: after all2015-12-17 17:31:10 fib1618: the objective here is capital appreciation2015-12-17 17:31:22 fib1618: and if a company is not able to expand their earnings2015-12-17 17:31:30 fib1618: or their R&D2015-12-17 17:31:33 fib1618: or territories2015-12-17 17:31:57 fib1618: then they are going to lose their intrinsic value2015-12-17 17:32:02 fib1618: and down they go as money continues to dry up2015-12-17 17:32:16 fib1618: and as more and more stocks get less and less capital2015-12-17 17:32:20 fib1618: down they go2015-12-17 17:32:29 fib1618: until you are left with the best of the best2015-12-17 17:32:58 fib1618: and eventually they join the party as more and more opinion shifts to other asset classes that are deemed "undervalued"2015-12-17 17:33:09 fib1618: that provide a better return2015-12-17 17:33:12 fib1618: bonds2015-12-17 17:33:20 fib1618: commodities2015-12-17 17:33:26 fib1618: and the like2015-12-17 17:33:40 fib1618: gold doesn't move until there are excesses in this same liquidity stream2015-12-17 17:33:45 fib1618: so gold moves lower as well2015-12-17 17:34:04 fib1618: this is why it had a reversal this morning...let me see how it did2015-12-17 17:34:23 fib1618: down $212015-12-17 17:34:26 fib1618: and pattern new lows2015-12-17 17:34:41 fib1618: the important thing about gold is2015-12-17 17:34:44 tuna: what about gold in 1980?2015-12-17 17:34:54 fib1618: it doesn't rise of because of inflation2015-12-17 17:35:13 fib1618: it rises on inflationary expectations2015-12-17 17:35:18 fib1618: 1980?2015-12-17 17:35:21 fib1618: well..2015-12-17 17:35:28 fib1618: we just came off the gold standard2015-12-17 17:36:00 fib1618: and the dollar basically collapsed because it didn't have underlying support2015-12-17 17:36:05 fib1618: you'll notice2015-12-17 17:36:14 fib1618: that even with interest rates skyrocketing2015-12-17 17:36:20 fib1618: it didn't keep gold from advancing2015-12-17 17:36:39 fib1618: I would call it an adjustment period to the newly created Fiat Currency2015-12-17 17:36:53 fib1618: and the market trying to put price valuations on products and commodities2015-12-17 17:37:19 fib1618: remember WIN?2015-12-17 17:37:27 fib1618: what else was there?2015-12-17 17:37:32 tuna: makes sense then a 25 year bear market in gold2015-12-17 17:37:38 fib1618: something else Nixon did2015-12-17 17:37:42 fib1618: correct2015-12-17 17:37:45 fib1618: because once you get to a certain point where the majority has no clue of value2015-12-17 17:38:07 fib1618: everyone jumps on board2015-12-17 17:38:16 fib1618: and you get your parabolic moves2015-12-17 17:38:22 fib1618: that eventually collapse2015-12-17 17:38:38 fib1618: and then you trend lower until you find equality...you "reset" 2015-12-17 17:38:46 fib1618: look at Bitcoin2015-12-17 17:38:49 fib1618: same thing there2015-12-17 17:38:57 fib1618: no one really knew what the value was/is2015-12-17 17:39:07 fib1618: this is one of the reasons why2015-12-17 17:39:13 fib1618: when a new issue comes to market2015-12-17 17:39:19 fib1618: I stay away from it for the first year2015-12-17 17:39:31 fib1618: got burned too many times2015-12-17 17:39:47 fib1618: all that emotional excitement blinds you2015-12-17 17:39:56 fib1618: we've all been there2015-12-17 17:40:12 fib1618: and then we try it again because "this time will be different"2015-12-17 17:40:20 fib1618: and wham, bam...you're hit again2015-12-17 17:40:43 fib1618: the biggest problem with trading is listening to everyone else's opinions2015-12-17 17:40:56 fib1618: newsletter writers2015-12-17 17:41:09 fib1618: people who are interviewed as "experts"2015-12-17 17:41:11 fib1618: problem is2015-12-17 17:41:25 fib1618: unless you find out when they turn tail and move on2015-12-17 17:41:40 fib1618: you're usually stuck because he or she said that it was a "no brainer"2015-12-17 17:41:43 fib1618: until it isn't2015-12-17 17:42:03 fib1618: and your "no brainer" takes on a whole new definition 2015-12-17 17:42:26 fib1618: discipline and consistency2015-12-17 17:42:29 fib1618: that's all that matters2015-12-17 17:42:42 fib1618: and above all else2015-12-17 17:42:48 fib1618: having something that works all the time2015-12-17 17:42:53 fib1618: and not just some of the time2015-12-17 17:43:08 fib1618: what I found out in my 30th year of trading (which was 15 years ago)2015-12-17 17:43:27 fib1618: that money knows what money likes...and money like to make more money2015-12-17 17:43:32 fib1618: so you just follow the money2015-12-17 17:43:39 fib1618: and let the answers on why to come later on2015-12-17 17:44:04 fib1618: all we should care about is where money is moving and at what rate of speed2015-12-17 17:44:49 fib1618: finally, the TM breadth MCO also snapped back toward its zero line2015-12-17 17:45:10 fib1618: but it didn't take out the highs seen at the beginning of the month2015-12-17 17:45:14 fib1618: and that's a near term problem2015-12-17 17:45:24 fib1618: of which the buyers will need to address by Monday2015-12-17 17:45:36 fib1618: or the sellers will pretty much have control through the end of the year2015-12-17 17:45:51 fib1618: which would then match our blueprint from earlier in the month2015-12-17 17:45:53 fib1618: so...2015-12-17 17:45:58 fib1618: reflex rally complete2015-12-17 17:46:04 fib1618: zero line snapbacks complete2015-12-17 17:46:17 fib1618: and now we're back to the sellers taking control2015-12-17 17:46:27 fib1618: any downside follow through on Friday2015-12-17 17:46:36 fib1618: would set up next week as being negative overall2015-12-17 17:47:00 fib1618: though we would like to expect a firm day on Thursday before shutting down for the holiday weekend2015-12-17 17:47:02 fib1618: we'll see how it goes2015-12-17 17:47:13 fib1618: let me quickly go through the sectors2015-12-17 17:47:47 fib1618: zero line snapback and failure in the XLY breadth MCO2015-12-17 17:47:49 fib1618: ah oh2015-12-17 17:47:57 fib1618: look at the new price highs in the XLP2015-12-17 17:48:18 fib1618: which is not confirmed by the XLP breadth MCO and MCSUM2015-12-17 17:48:34 fib1618: looks like Aunt Minnie and Uncle Charley bought the reflex2015-12-17 17:48:50 fib1618: and the plug is about to be pulled2015-12-17 17:48:56 fib1618: too bad2015-12-17 17:49:24 fib1618: any downside follow through and strong bear divergence in place2015-12-17 17:49:41 fib1618: breakdown again in the XLE2015-12-17 17:49:59 fib1618: as the snapback toward zero was on the weak side2015-12-17 17:50:30 fib1618: and today's reading in the XLE breadth MCO has pushed the XLE breadth MCSUM below the -1000 level2015-12-17 17:50:48 fib1618: so a break of the $59 level is now probable2015-12-17 17:51:09 fib1618: boy...one has to wonder if the economy is so good2015-12-17 17:51:17 fib1618: why is the cost of energy so weak?2015-12-17 17:51:27 fib1618: foolish economists2015-12-17 17:51:40 fib1618: it's right there in front of them and still they're blind2015-12-17 17:52:02 fib1618: and raise rates based on data that's in the rear view mirror2015-12-17 17:52:30 tuna: do oil prices follow in lock step with XLE?2015-12-17 17:52:36 fib1618: the XLF is also in danger of a breakdown here2015-12-17 17:52:43 fib1618: no...XLE leads oil2015-12-17 17:52:48 fib1618: as PM stocks lead gold2015-12-17 17:53:14 fib1618: remember that equities discount future earnings2015-12-17 17:53:27 tuna: man gonna look at oil futures seriously2015-12-17 17:53:36 fib1618: this is why using divergence techniques between stocks their underlying commodity works so well2015-12-17 17:53:51 fib1618: well...my suggestion is a ETF2015-12-17 17:54:08 fib1618: futures and options are have too much time risk with them2015-12-17 17:54:29 tuna: day trading only2015-12-17 17:54:47 fib1618: and be careful of the Direxion funds which can give you just as much punch2015-12-17 17:55:00 fib1618: but you have to be careful there too as they are stop and start funds2015-12-17 17:55:07 fib1618: understood2015-12-17 17:55:11 tuna: yep2015-12-17 17:55:16 fib1618: but you have immediate draw down with the futures2015-12-17 17:55:23 fib1618: but not with the ETF's2015-12-17 17:55:35 fib1618: either you're right or wrong less a commission2015-12-17 17:55:53 fib1618: personal preference2015-12-17 17:56:53 fib1618: take a look at ERY2015-12-17 17:57:11 tuna: got it thanks2015-12-17 17:57:21 fib1618: chart is in a bullish configuration2015-12-17 17:57:44 fib1618: and the SAR stop is at 27.49...it closed today at 30.622015-12-17 17:58:16 fib1618: just remember that the ETF giveth and taketh away very quickly as everything is reset every day2015-12-17 17:58:27 fib1618: so good for day traders2015-12-17 17:58:33 fib1618: next...2015-12-17 17:58:53 fib1618: the XLF breadth MCSUM is testing horizontal support now2015-12-17 17:58:56 fib1618: a break of that2015-12-17 17:59:11 fib1618: and $22.50 is doable2015-12-17 17:59:30 fib1618: XLV remains on the bullish side2015-12-17 17:59:42 fib1618: with the XLV breadth MCO finding zero line support today2015-12-17 18:00:07 fib1618: while the XLB breadth MCSUM remains nicely above its zero line2015-12-17 18:00:15 fib1618: so if we do have a downside resumption2015-12-17 18:00:28 fib1618: this basket of stocks should have less price decay2015-12-17 18:00:37 fib1618: and better performance on bounces2015-12-17 18:00:41 fib1618: keep in mind though2015-12-17 18:00:58 fib1618: we're still in the sign up period for ACA2015-12-17 18:01:07 fib1618: so this strength might all blow away in January2015-12-17 18:01:35 fib1618: the XLK is hanging in there2015-12-17 18:01:51 fib1618: notice how XLK breadth MCSUM bounced right off the +250 level2015-12-17 18:02:20 fib1618: but it will take the XLK breadth MCO to move to a higher high to break the downside chains2015-12-17 18:02:37 fib1618: no...sorry2015-12-17 18:02:43 fib1618: talking about the XLU on that one2015-12-17 18:02:49 fib1618: scrolled too fast2015-12-17 18:03:11 fib1618: back to the XLK breadth MCSUM2015-12-17 18:03:19 fib1618: it's at the +250 level now2015-12-17 18:03:41 fib1618: so any downside follow through by Monday there would start to weaken the price action2015-12-17 18:03:44 fib1618: so....2015-12-17 18:03:57 fib1618: there's a ray of hope for the buyers here2015-12-17 18:04:20 fib1618: but the sellers took back control after relieving last week's "oversold" extremes2015-12-17 18:04:52 fib1618: any follow through by either/or will still dictate what it likely to happen over the next two week2015-12-17 18:05:12 fib1618: but the technical evidence strongly suggests continued weakness at this time2015-12-17 18:05:17 fib1618: OBV's...2015-12-17 18:05:50 fib1618: pretty much neutral right now2015-12-17 18:05:56 fib1618: so one side is about to take control2015-12-17 18:06:10 fib1618: with a BIG move coming with the NDX2015-12-17 18:06:28 fib1618: wow2015-12-17 18:06:33 fib1618: NYSE TRIN at 3.29!2015-12-17 18:06:48 fib1618: Open 10 at .992015-12-17 18:07:27 fib1618: NASDAQ TRIN at 1.552015-12-17 18:07:30 fib1618: Open 10 at .892015-12-17 18:08:02 fib1618: TM TRIN at 2.032015-12-17 18:08:12 fib1618: Open 10 at .922015-12-17 18:08:41 fib1618: guess there was a huge amount of shorts on futures2015-12-17 18:08:52 fib1618: we know there are with December options because of the FED action2015-12-17 18:09:06 fib1618: could be once these are expired2015-12-17 18:09:10 fib1618: that could lift prices as well2015-12-17 18:09:13 fib1618: have to watch2015-12-17 18:09:18 fib1618: let me check the BETS2015-12-17 18:10:14 fib1618: -752015-12-17 18:10:18 fib1618: no change2015-12-17 18:10:19 fib1618: but the NAUD is now a day away from being bearish2015-12-17 18:10:56 fib1618: which would push it to -80 and the all time lows2015-12-17 18:11:11 fib1618: a -85 or lower is needed for a "strong sell"2015-12-17 18:11:25 fib1618: and considering that we never had that with the 2008/2009 decline2015-12-17 18:11:39 fib1618: I wouldn't want to know what could happen if we have anything below -80 2015-12-17 18:11:49 fib1618: anything else?2015-12-17 18:12:10 fib1618: CRB index continues to make new lows2015-12-17 18:12:22 fib1618: this is really getting deflationary now2015-12-17 18:13:03 fib1618: which makes all the more important that we go for capital appreciation, no less, capital preservation2015-12-17 18:13:27 fib1618: can't believe they tightened2015-12-17 18:13:41 fib1618: did you notice how fast the banks moved their rates up?2015-12-17 18:13:46 fib1618: Wells Fargo was first2015-12-17 18:13:58 fib1618: prediction2015-12-17 18:14:18 fib1618: we're going to see bankruptcies climb very fast in the 1st quarter2015-12-17 18:14:35 fib1618: not much we can do, I guess2015-12-17 18:14:39 fib1618: anyway2015-12-17 18:14:45 fib1618: OK...if there's nothing else2015-12-17 18:14:48 fib1618: I'm going to take off2015-12-17 18:15:00 fib1618: this weekend's breadth charts might be a little late2015-12-17 18:15:11 fib1618: but I will try to get them up Saturday night2015-12-17 18:15:25 fib1618: otherwise...don't hate me if they're late on Sunday, OK?2015-12-17 18:15:32 fib1618: have a great weekend everyone2015-12-17 18:15:34 fib1618: good night

"As for it being different this time, it is different every time. The question is in what way, and to what extent" - Tom McClellan

"An economist is someone who sees something happen, and then wonders if it would work in theory" - Ronald Reagan

"What we see depends mainly on what we look for" - John Lubbock

"The eye sees only what the mind is ready to comprehend" - Henri Bergson

“Answers are easy; it’s asking the right questions which is hard” - Dr. Who - 1977

"You know the very powerful and the very stupid have one thing in common - they don't alter their views to fit the facts, they alter the facts to fit their views (which can be uncomfortable if you happen to be one of the facts that needs altering)" - Dr. Who - 1977

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